Davos Latest: IMF’s Gopinath Sees Resilience in Global Economy

Davos Latest: IMF’s Gopinath Sees Resilience in Global Economy

Updated: 18 days, 15 hours, 1 minute, 50 seconds ago

This content was published on January 18, 2023 - 08:44

(Bloomberg) -- Gita Gopinath, the International Monetary Fund’s No. 2 official, said the global economy has shown “signs of resilience,” and European Central Bank Governing Council member Francois Villeroy de Galhau predicted that the euro region should avoid a recession this year.

The comments Wednesday to Bloomberg Television were in line with the general tone of cautious optimism at the World Economic Forum in Davos. Chinese Vice Premier Liu He projected Tuesday on the opening day that the world’s second-largest economy will normalize as Covid-19 restrictions ease.

A speech by German Chancellor Olaf Scholz, the only Group of Seven leader due to attend the event, is one of Wednesday’s highlights. Scholz spoke with Bloomberg Editor-in-Chief John Micklethwait in Berlin on Tuesday and said he’s convinced Germany will avoid recession this year and that he is in talks with allies about sending battle tanks to Ukraine.

Ukrainian President Volodymyr Zelenskiy and United Nations Secretary General Antonio Guterres are also due to address the forum. Tune in to Bloomberg Television for interviews with Norwegian wealth fund CEO Nicolai Tangen, Mubadala CEO Khaldoon Al Mubarak and Standard Chartered CEO Bill Winters, among many others.

Key Developments

Scholz Sees Germany Riding Out War in Ukraine Without RecessionVilleroy Says Lagarde’s Half-Point ECB Guidance Still ValidUS Debt Standoff Is Risk World Doesn’t Need, IMF’s Gopinath SaysBridgewater’s Bob Prince Says the Boom-Bust Cycle Is Back

(All times CET)

State Street ‘Not Pursuing M&A’ (9:20 a.m.)

State Street Corp.’s chief executive officer said the US lender isn’t actively looking at M&A opportunities, a couple of months after the firm decided not to pursue an acquisition of Brown Brothers Harriman & Co.’s investor-services business.

“We are not actively looking,” Ronald O’Hanley told Bloomberg TV, while stressing the bank would still consider opportunities as they arise. He said he was surprised at the optimism expressed at Davos, saying he expected inflation to persist thanks to tight labor markets and continuing geopolitical risks. “It’s still early to say that it is all over,” he said.

Villeroy Sees Recession Avoided This Year (8:45 a.m.)

Villeroy said the euro region should avoid a recession this year and that both headline and core inflation “will probably peak in this semester.”

“But we must stay the course in our battle against inflation, I am very clear about that,” Villeroy, who is also the governor of the Bank of France, told Bloomberg TV. “We will win this battle, let me be extremely straightforward. We will bring inflation back towards 2% by the end of 2024/25.”

IMF Says Japan Risks Missing Price Target (8:25 a.m.)

Japan’s central bank faces a different challenge from global peers because of the high risk that inflation there will end up below target, according to the International Monetary Fund’s No. 2 official.

“The Bank of Japan has a pretty complex decision to deal with,” Gita Gopinath, the IMF’s first deputy managing director, said an interview with Bloomberg TV. “Unlike the major economies of the world, they have inflation going up, but the risk of inflation sliding back well below their target remains high.”

IMF’s Gopinath Sees Inflation Peak (8:20 a.m.)

Headline inflation has probably peaked but some of “the more sticky components” such as the services sector are still trending up in some countries, the IMF’s Gopinath, adding that 2023 will be a “tough year.”

The new IMF forecasts for the global economy, due at the end of the month, will be “in the ballpark of what we put out in October,” she said. “After going through about three rounds of downgrades at least we don’t have a worse outcome we’re looking at this time around.”

“While we have global growth bottoming out this year, it improves towards the second half of this year and then into 2024,” Gopinath added. “That’s because we’re seeing signs of resilience.”

Crytpo Tracker Is Hiring for Expansion (8:10 a.m.)

Chainalysis Inc., a company that specializes in tracking crypto transactions and the entities behind them, is seeking to boost staff by about 11% as part of a global expansion plan that could include new acquisitions. 

The startup, whose backers include Singaporean sovereign wealth fund GIC, is looking for data scientists, technology analysts and intelligence experts under a push to grow its workforce by 100 to as many as 1,000 employees this year, according to co-founder and Chief Executive Officer Michael Gronager.

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